Construction cost estimation

Construction cost estimation

From meter and equipment pricing to implementation budget, maintenance and change management

The cost of building a fountain is the result of a series of architectural, structural, mechanical, electrical and operational decisions. Two fountains with the same external dimensions may have different costs due to differences in nozzle type, spray height, number of independent groups, lighting quality, treatment method, site conditions and service level.

Therefore, a reliable estimate should clarify what will be delivered, with what specifications, under what conditions and with what liability limits. The final number is useful for the employer when it can be related to specific quantities, equipment, services and assumptions.

This chapter explains how to set up such an estimate and provides a numerical example of the cost of construction and operation.

All prices, tariffs, percentages and example values in this chapter are hypothetical and educational; Market day prices, GSO price offers or specifications of an executed project are not considered.

36–1. The difference in equipment prices, contract implementation costs and project budgets

Before the calculation, it should be clear what is meant by "fountain cost".

The price of the equipment may only be the purchase price of pumps, nozzles, lights, signs and other parts. Transport, installation, structure, cabling and commissioning are not necessarily included.

The amount of the contract depends on the scope of the contract. One contract may cover only the supply and installation of equipment, while another may cover design, construction, installation, programming, training, and delivery.

The total project budget for the employer, in addition to performance contracts, can include the cost of studies, monitoring, subcontracts, permits, site preparation, risk reserves, and other payments outside of the original contract.

Operating cost is also a separate set of electricity and water consumption, manpower, consumables, service, test and repair.

These four numbers should be separated from each other in the estimation report. Comparing the purchase price of one project's equipment with the full budget of another project does not give a usable result.

In the introduction of Crystal Fountains services, the initial estimate includes, in addition to providing equipment, mechanical, electrical, installation, commissioning and programming. This breakdown shows that the fountain budget should look beyond the parts list. Crystal Fountains technical support and budget review services ^[253]

36–2. estimated birth certificate; Information that should be next to each number

Each copy of the estimate must have a specific birth certificate.

The phrase "price of the day" without date, source and duration of validity is not enough for the financial file of the project. Also, the amount prepared based on a preliminary plan should not be used without revision for the modified implementation plan.

GAO's Cost Estimating Guide also introduces goal and scope determination, technical basis, work breakdown structure, assumptions, data, sensitivity and risk analysis, and updating with actual costs as key estimation steps. GAO cost estimation and evaluation guide ^[254]

36–3. Estimates at different stages of design

The estimation method should be proportional to the amount of available information.

The same error percentage should not be declared for all these steps. An estimate that does not yet know the location of the engine room or its electrical route does not have the same level of confidence as an estimate that has an executive map and a valid inquiry.

In the early stages, it is better to introduce the main factors of budget change; For example, changing the type of water fountain from a pond to a dry floor, increasing the number of independent groups or the need to build a new engine house.

36–4. Defining the scope and boundaries of responsibilities

Many cost differences are caused by missing the junction of two parts of the project.

The supplier may have included the light cable to the junction box, while the client expects the cabling to the panel to be the same amount. Or the structural contractor may think that the mechanical team will supply the parts that pass through the wall, but these items are not seen in the mechanic's proposal.

To avoid this situation, the work boundary should be written.

On the GSO website, in addition to pumps, nozzles, lighting and controls, groups for accessories, fittings, filtration and design and installation services have been introduced. This category is useful for organizing the structure of items; But the scope of each offer should be checked independently. Products and services of GSO urban fountain ^[255]

Figure 1-36 - Boundary of fountain work

Prepare a schematic of the pond, motor house, switchboard, water distribution, input and discharge electricity. The area of ​​responsibility of each department should be numbered with a specific color and delivery points.

*Suggested Caption: "Definition of delivery points prevents deletion or recalculation of joint costs."*

36–5. Cost breakdown structure

In order not to forget anything, expenses should be recorded in specific groups.

Each cost must have a specific place in this structure. For example, if the light source is included in the price of the panel, it should not be calculated again in the lighting package.

36–6. Meter method and preparation of list of values

The basic relationship of each cost line is as follows:

$C_i=Q_i\times R_i$

in which:

• $C_i$ : row cost;

• $Q_i$: amount of work or number of equipment;

• $R_i$ : unit rate of the same row.

The sum of the rows is equal to:

$C_{\mathrm{items}}={\sum }_{i=1}^n{Q}_i{R}_i$

For the calculation to be manageable, the "row description" should specify what the rate includes.

For example, the "plumbing" row is not enough. The material, diameter, pressure category, type of connection, installation method, and the state of inclusion of connections and testing should be specified.

Structure meter

Concrete volume, reinforcement weight, formwork surface, sealing surface and final coating should be extracted separately from the map. The area of ​​the pond plan is not equal to the sealing surface; Walls, channels, steps and details may also be effective at the work surface.

Pipe and cable meter

The length of the horizontal path alone is not enough. Vertical paths, panel entry, wall crossing, service ring and connection details should also be seen.

Installed amount, purchase amount and payable amount may vary. For example, a cut-off can have an effect on the purchase, but it does not necessarily add to the billable length according to the contract.

meter equipment

The number of equipment should match the plan, equipment list and control logic. 24 nozzles does not necessarily mean 24 pumps or 24 independent channels.

Calculation example of a row

If 24 nozzles are considered at a hypothetical rate of 8 million tomans per number:

$C_{\mathrm{nozzles}}=24\times 8=192$

The cost of this row is equal to 192 million tomans. Basic inclusion and regulatory connection should be specified in the description of the same row.

36–7. Estimating the cost of design and structure

Design cost

Design services can include drafting, architectural, hydraulic, structural, mechanical, electrical, control, lighting, and documentation. The number of meetings, frequency of corrections, model preparation and workshop visits also affect the cost.

A follow-up method is to estimate the time required for each specialty:

$C_{\mathrm{design}}={\sum }_j{H}_j{r}_j+C_{\mathrm{survey}}+C_{\mathrm{special}}$

In this regard, $H_j$ is the man-hour of each specialty and $r_j$ is the rate of the same service. Special withdrawal or testing fees are added separately only when not included in the service rate.

In the lump sum design contract, the outputs and the number of included revisions should be specified.

The cost of the structure

The cost of the structure is not limited to the volume of concrete. Soil conditions, groundwater, access, existing demolition, sewage transport, seams, buried parts, sealing, drainage and repair access are also affected.

For a fountain on a roof or adjacent to an existing building, structural inspection and reinforcement may be a significant part of the cost. In this case, using the cost ratio of an unmodified ground fountain is not appropriate.

Sealing testing and defect correction should also be determined in the scope of work; Delivery of the pool without testing is not a proper basis for finalizing the cost.

36–8. Estimation of nozzle, pump, mechanics and purification

nozzle

Nozzle pricing should be done after determining the type of effect, flow rate, required pressure, material, connection dimensions and accompanying equipment.

It is not enough to compare two nozzles only based on the connection diameter. A control nozzle, a moving unit or a nozzle with dedicated accessories has a different cost structure.

pump

The pump should be characterized by operating point, performance curve, installation conditions, material, input power and control method. The price of a pump with the same rated power is not necessarily the price of a suitable technical alternative.

Base, coupling, check valve, strainer, cable, drive and service facilities shall be provided either in the pump package or in separate rows.

Pipes, collectors and valves

The cost of this part is not limited to length and diameter. Material, pressure, construction method, number of branches, opening joints, support, corrosion protection and testing are also important.

For the custom collector, the construction drawing and connection specifications should be the basis of the inquiry.

Purification and water quality management

The treatment package should be determined based on water use and design. Its components can include filter, pump, valves, washing circuit, disinfection equipment, injection and sensor.

The cost of water and wastewater disposal, consumables and service are recorded in the operating cost. The initial procurement of equipment and their periodic consumption should not be mixed together.

36–9. Estimation of electricity, control, lighting and sound

Power and control

The estimation of this section should take into account the number of circuits, powers, pump control method, panel environmental conditions and designed protections.

A description of "a complete switchboard" without a list of components and functionality is insufficient for price comparison. The specification should clarify the scope of the controller, drives, power supplies, protections, sensors, communications and software.

Scheduling, backups, necessary permissions, and file delivery should also be explicitly defined.

lighting

The number and power of lights, color, radiation angle, control method, factory cable length, connection, base and power supply equipment have an effect on the cost.

A cheaper light may require more wiring or power supplies. The comparison should be made for the installable and operational set.

sound

In a musical fountain, audio costs typically include speakers, amplifiers, processing or mixers, speakers, cables, stands, appropriate enclosures, and final setup.

In the estimate, it should be clarified whether the cost of designing the show and synchronizing water and music is included in the audio package or is recorded in the programming service.

If the fountain is ordered without music, the sound package can be a standalone option; Its amount should not be hidden in the basic budget.

36–10. Installation, commissioning and delivery

The installation price depends on the working conditions. Working in a ready and accessible dock is not the same as setting up at night in a busy field or deploying floating equipment.

The installation cost may include manpower, tools, lifting equipment, temporary labor, site protection and coordination with other contractors.

Startup should also have specific output:

• Test circuits and equipment;

• Adjusting the height and direction of the nozzles;

• light adjustment and display program;

• Testing error and stop modes;

• control of purification and discharge performance;

• recording the results and solving the remaining cases;

• Training and delivery of documents.

In the OASE service description, planning, specification, cost review, testing, installation, commissioning and maintenance services are introduced as distinct steps. This breakdown is also useful for setting project service tiers. Project service steps in OASE Professional ^[256]

Figure 2–36 — Cost of executive services

Choose three photos from the company's archive: equipment installation, nozzle adjustment and user training. Include the name of the project and the work stage under each photo.

*Suggested subtitle: "Installation, adjustment and training, each has a specific output and cost."*

36–11. Complete example of initial cost estimate

To teach the calculation method, a hypothetical project with the following specifications is considered:

The following values are the assumptions of a training list and cannot be extracted from the dimensions of the plan alone. In the real project, the structure map, routes and equipment specifications should be based on meters.

Unit of rate and amount in the table: Million Tomans.

In this table, the structural operation rate includes the execution of the same row. Mechanical and electrical installation are included in separate rows and should not be included in the equipment supply rate.

The aggregate unit rate of pipe and cable is used only for the sake of brevity; In the actual estimate, the material, diameter or cross section and type of each item should have an independent row. Packages should also have specifications and values ​​attached.

Add overhead and profit

In this example, it is assumed that general expenses outside the workshop and profit do not exist in the rates of the table, and their sum is considered equal to 8% of the sum of the rows:

$C_{\mathrm{overhead+profit}}=3261\times 0.08=260.88$

Therefore:

$C_{\mathrm{base}}=3261+260.88=3521.88$

The basic amount of the defined domain: 3,521.88 million Tomans.

The percentage of 8% is the assumption of this example. If the rates received from the beginning include interest and general expenses, it is wrong to add them back.

Educational risk reserve

To demonstrate the budgeting method, a hypothetical reserve equal to 10% of the base amount is considered:

$C_{\mathrm{reserve}}=3521.88\times 0.10=352.188$

$B=3521.88+352.188=3874.068$

Sample budget for the defined domain, with hypothetical reserve: about 3.874 billion Tomans.

This figure is not the full budget of any real project or the price of running a water feature of the same dimensions. The following items are not calculated in it:

• Construction of a new facility space;

• Provision or reinforcement of out-of-bounds branches;

• Landscaping outside the scope of the table;

• Audio system;

• independent costs of the employer, such as supervision and necessary permits;

• Applicable taxes and duties;

• Price increase due to the time interval between the purchase and the base date.

In the actual report, each out-of-scope item should be linked to its respective procurement and budgeting officer.

36–12. Optional items and how to add them

To avoid ambiguity, options must be separated from the underlying amount.

For example, the following hypothetical audio package could be added to the project:

This 340 million tomans is only the direct sum of the option. After its selection, the general costs, timing effect and related risk reserve should also be reviewed with the same estimation basis.

It should also be clear what the choice of option adds to or subtracts from the baseline. For example, if a part of the basic control equipment is replaced by another equipment, the amount of the previous equipment should be deducted from the calculation.

36–13. Annual cost of operation and maintenance

A construction budget without an estimate of maintenance costs does not give a complete picture of the project's financial commitment.

The annual cost can be divided as follows:

$C_{\mathrm{annual}}=C_{\mathrm{electricity}}+C_{\mathrm{water}}+C_{\mathrm{labor}}+C_{\mathrm{consumables}}+C_{\mathrm{service}}+C_{\mathrm{testing}}+C_{\mathrm{parts}}$

In each project, it should be checked that an item is not calculated both in the service contract and in the independent row.

Calculation of electricity consumption

For each equipment or operating mode:

$E=P_{\mathrm{input,avg}}\times t$

The power used should be the average input power in the same working condition. The rated power of the engine is not necessarily equal to the power consumption in all modes.

For the example of this chapter, the following assumptions are considered:

The purification work schedule in this table is only a calculation assumption; The actual time should be determined by the water quality requirement and the operation plan.

If the simplified and hypothetical electricity tariff is 4,000 Tomans per kilowatt-hour:

$C_{\mathrm{electricity}}=12128.52\times 4000=48,514,080$

The cost of electricity will be about 48.51 million tomans per year. Fixed charges, demand or other billing components, if any, are calculated separately.

Water cost calculation

Compensatory water consumption should be estimated from evaporation, splashing, washing, planned discharge and other outputs. The volume of internal water circulation is not the consumption of purchased water.

Assuming an annual consumption of 650 cubic meters and a training rate of 30,000 Tomans per cubic meter:

$C_{\mathrm{water}}=650\times 30000=19,500,000$

It means 19.5 million tomans per year. Wastewater disposal fee or other tariff components, if charged separately, are added to this number.

Sample annual cost table

In this example, daily manpower, specialized service, and tests have separate scopes. The amount of parts is also the cost of replenishment of consumed inventory and does not repeat the initial purchase of row 26 of the manufacturing table.

This sum does not include the basic replacement of equipment in the coming years. For the multi-year financial plan, the time and amount of such replacements should be predicted separately.

36–14. spare parts; What and how much?

The budget for spare parts should be determined based on the criticality of the equipment, the time of supply and the possibility of replacement.

A low-cost part with a long lead time may cause significant downtime. On the other hand, buying a lot of expensive parts that are rarely used is not necessarily a good decision.

A spare list should include the following information:

Primary spare parts, inventory and annual consumption cost are three different concepts. In the cost analysis, their re-counting should be avoided.

36–15. Risk reserve, price change and scope change

Three factors can change the required amount of the project and should be seen separately.

Uncertainty in the existing range

Such as the uncertainty of the condition of a part of the bed, the exact length of some paths or the amount of correction needed in the existing structure.

Price changes over time

Such as changing the price of equipment, shipping or currency-related items until the time of purchase.

Changing the employer's request

Such as adding a moving nozzle, increasing the number of programs or expanding the range of the fountain.

The risk reserve is to cover the defined uncertainties. The addition of new work should be checked through the change registration and budget approval.

A simple example of risk registration

This 117 million tomans is the average of the simple probabilities of these three events; The loss ceiling or budget is not known with certainty. Correlation of events and uncertainty of values ​​can also change the result.

This table is an independent example of the analysis method and its amount should not be added to the 10% reserve of the previous example without checking; It may recalculate the same risks.

Price change

For currency dependent equipment, the actual currency portion of the price must be specified. The exchange rate change should not be generalized to the total cost of design, structure and installation.

In multi-month or multi-year estimates, the purchase plan is important. The equipment that is ordered at the beginning of the project does not have the same time exposure as the pen that will be purchased at the end of the project.

Reserve budget is not a fixed payment amount. Its consumption should be recorded based on the cause, evidence and project approval mechanism.

36–16. Sensitivity analysis and cost reduction

Sensitivity analysis shows which assumptions have the greatest effect on the budget.

In the example of the chapter, the cost of nozzles is 192 million Tomans. If their rates increase by 20%:

$\Delta C=192\times 0.20=38.4$

This change is equal to about 1.18% of the sum of the initial rows of 3,261 million tomans; Before the possible effect on general expenses and reserves.

So a 20% increase in the price of a pen does not mean a 20% increase in the entire project.

To reduce costs, options should also be considered in terms of performance:

Eliminating electrical protection, service access, or essential water quality equipment should not be accepted as savings. When comparing the options, the cost of construction, operation and the ability to provide service should be seen together.

Place Figure 36-3 — Cost Share Chart

From the table of this example, prepare a chart with the groups of design, structure, mechanics, electricity and control, services and spare parts. Under the diagram, insert the phrase "cost distribution in the hypothetical example of this chapter".

This chart should not be presented as a fixed percentage of cost across all fountains.

36–17. Cost control during execution

After the project starts, the estimate should be updated with the actual purchase and implementation.

The simple relationship of predicting the final cost is as follows:

$C_{\mathrm{forecast}}=C_{\mathrm{incurred}}+C_{\mathrm{remaining}}$

In this regard:

• $C_{\mathrm{incurred}}$: cost of work and items realized until the report date;

• $C_{\mathrm{remaining}}$: estimate of remaining cost until completion.

The backlog should include unpaid obligations related to future work and items not yet ordered, without recounting.

The amount paid alone is not a measure of cost progress. Advance payment may be paid before delivery of the equipment; On the other hand, part of the work done has not yet been invoiced.

At least the following information should be recorded for each change:

The effect of the delay is not only the increase in the price of equipment; Extension of the workshop, warehousing, protection of installed items and re-visiting of the commissioning team may also incur costs.

36–18. Documents required to deliver a usable estimate

The final estimate should be submitted with the following documents:

1. Birth certificate and date of estimation basis; 2. Description of the domain and things outside of it; 3. Base maps and specifications with revision number; 4. List of values ​​and measurement method; 5. Inquiries and related business terms; 6. Separation of supply, installation, testing and training; 7. Basis of public expenses and profit; 8. Optional items and the effect of their selection; 9. Registration of risks and reserve basis; 10. Annual cost estimate and major replacements; 11. Purchase and payment schedule; 12. The list of assumptions that must be determined before the contract.

The final control should clarify whether all numbers follow the same scope, whether the installation or transport has been recalculated, whether the packages have sufficient specifications and whether items outside the contract have been seen in the employer's budget.

The estimate becomes a project management tool when it is updated as the plan, quantity, price, and schedule change, and the path of each number change remains trackable.